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KOFA HIGH SCHOOL SOCIAL SCIENCES DEPARTMENT AP ECONOMICS STUDY GUIDE # 15 - MEASUREMENTS OF PERFORMANCE ______________________________________________________________________________ CHAPTER LEARNING OBJECTIVES 1. STUDENTS WILL BE ABLE TO DEFINE AND EXPLAIN THE MEASUREMENT METHODS USED TO EVALUATE AND MONITOR THE ECONOMY 2. STUDENTS WILL BE ABLE TO DEFINE THE TYPES OF GDP AND EXPLAIN THE METHODS HOW IT IS CALCULATED ( INCOME AND EXDENDITURE APPROACHES ) - INCLDING THE ABILITY TO DIFFERENTIATE BETWEEN FINAL , INTERMEDIATE , DURABLE , AND NON – DURABLE GOODS 3. STUDENTS WILL BE ABLE TO DEFINE AND EXPLAIN THE FACTORS THAT INFLUENCE ( AGGREGATE SUPPLY AND DEMAND ) , AND LIMIT GDP 4. STUDENTS WILL BE ABLE TO IDENTIFY , DEFINE , AND EXPLAIN THE MEASUREMENTS THAT COMPLEMENT GDP - NET NATIONAL PRODUCT , NATIONAL INCOME , PERSONAL INCOME , DISPOSABLE INCOME , AND DEPRECIATION 5. STUDENTS WILL BE ABLE TO IDENTIFY AND EXPLAIN THE FACTORS THAT PROMOTE ECONOMIC GROWTH > SAVINGS , CAPITAL DEEPENING , AND TECHNOLOGICAL ADVANCEMENT 6. STUDENTS WILL BE ABLE TO DEFINE AND EXPLAIN “ SOLOW’S METHOD ” 7. STUDENTS WILL BE ABLE TO IDENTIFY AND EXPLAIN THE FACTORS THAT PROMOTE TECHNOLOGICAL PROGRESS / ADVANCEMENT ******************************************************************************** DR . HOLDEN’S VIDEO ON ADVANCED CONCEPTS RELATED TO THE “ CIRCULAR FLOW ” OF THE ECONOMY AND HOW IT RELATES TO GROSS DOMESTIC PRODUCT THE FLOW OF MONEY FIRMS HOUSEHOLDS THE FLOW OF VARIABLES IN THE REAL WORLD COMPLEX MODEL OF THE CIRCULAR FLOW , WHAT ARE THE THREE INJECTIONS INTO THE INCOME MODEL ABOVE ? 1. 2. 3. IN THE REAL WORLD COMPLEX MODEL OF THE CIRCULAR FLOW , WHAT ARE THE THREE LEAKAGES FROM THE INCOME MODEL ABOVE ? 1. 2 3. ALL ABOUT GROSS DOMESTIC PRODUCT ( GDP ) : WHAT IS THE “ NATIONAL INCOME ACCOUNTING SYSTEM ” ? WHAT IS THE “ GROSS DOMESTIC PRODUCT ( GDP ) ” ? 1. 2. 3. WHAT IS THE DEFINITION OF “ DOLLAR VALUE ” ? 4. WHAT ARE “ FINAL GOODS ” AND SOME EXAMPLES ? WHAT ARE “ INTERMEDIATE GOODS ” AND SOME EXAMPLES ? DO WE COUNT IN OUR GDP THE FINAL GOODS PRODUCED BY BMW WITHIN THE UNITED STATES ? WHAT ARE 2 WAYS TO CALCULATE GDP AND WHAT DO THEY INCLUDE ? 1. 2. “ EXPENDITURE APPROACH “” - 1. 2. 3. 4. “ INCOME APPROACH ” - 1. 2. WHAT ARE “ DURABLE GOODS ” AND SOME EXAMPLES ? WHAT ARE “ NON – DURABLE GOODS ” AND SOME EXAMPLES ? WHAT ARE THE 2 TYPES OF GDP ? 1. “ NOMINAL GDP ” - 2. “ REAL GDP ” - WHAT ARE THE 4 FACTORS THAT LIMIT GDP ? 1. 2. 3. 4. ILLUSTRATING ECONOMIC CONDITIONS : WHAT ARE THE 2 FACTORS THAT INFULENCE GDP ? 1. “ AGGREGATE DEMAND ” - * PUT CALCULATION EXAMPLE ON THE BACK OF THE LAST PAGE OF THE STUDY GUIDE 2. “ AGGREGATE SUPPLY ” - WHAT DOES THE AGGREGATE DEMAND CURVE REFLECT ? LIKE A MARKET DEMAND CURVE ……… LIKE A MARKET DEMAND CURVE …….. THE 6 THINGS AND THEIR VARIABLES THAT CAN CAUSE A SHIFT IN AGGREGATE DEMAND : 1 AND 2 : 1. 2. 3. 4. 5. 6. 7. ******************************************************************************** DR . HOLDEN VIDEO ON THE CONSUMPTION COMPONENT OF GDP CONTRARY TO GENERAL BELIEF , WHAT DOES DR . HOLDEN SAY ABOUT WHAT HAPPENS TO CONSUMPTION WHEN INFLATION BECOMES A FACTOR ? ******************************************************************************** 3. 1. 2. 4. 5. 3. ******************************************************************************** DR . HOLDEN VIDEO ON THE INVESTMENT COMPONENT OF GDP WHEN TALKING ABOUT INVESTMENT AS IT RELATES TO GDP , HOW MUCH INVESTMENT IS USUALLY “ NET INVESTMENT ” AND WHAT DOES THE “ NET INVESTMENT ” MEAN ? WHAT IS THE “ MARGINAL EFFICIENCY OF CAPITAL ( MEC ) ” - WHO CAME UP WITH , AND WHAT IS , THE “ ACCELERATOR THEORY OF INVESTMENT ” - ******************************************************************************** 4. 5. 6. FOOD FOR THOUGHT EXAMPLE REGARDING AGGREGATE DEMAND THE PRODUCTION POSSIBILITIES CURVE AND THE LONG RUN AGGREGATE SUPPLY CURVE THE PRODUCTION POSSIBILITIES CURVE ……. THE 10 VARIABLES THAT SHIFT THE LRAS CURVE : 1. 6. 2. 7. 3. 8. 4. 9. 5. 10. WHAT DOES THE SHORT RUN AGGREGATE SUPPLY CURVE REFLECT ? ILLUSTRATIONS OF OVERALL ECONOMIC CONDITIONS STARTED WITH THE KEYNESIAN EXPENDITURE MODEL , SOMETIMES CALLED THE “ KEYNESIAN CROSS ” INVESTMENT DEMAND THE MODERN MODEL WHAT ARE THE 6 MEASURES THAT COMPLEMENT GDP ? 1. “ GROSS NATIONAL PRODUCT ” - “ DEPRECIATION ” - 2. “ NET NATIONAL PRODUCT ” - 3. “ NATIONAL INCOME ” - 4. “ PERSONAL INCOME ” - 5. “ DISPOSABLE INCOME ” - 6. “ GDP PER CAPITA ” - WHAT ARE THE 6 FACTORS IN PROMOTING ECONOMIC GROWTH ? 1. “ SAVINGS ” - 2. “ CAPITAL DEEPENING ” - 3. 4. 5. 6. “ TECHNOLOGICAL PROGRESS ” - WHAT IS “ SOLOW’S METHOD ” ? WHAT ARE THE 4 THINGS THAT DRIVE TECHONOLOGICAL PROGRESS ? 1. 2. 3. 4.